Major crude oil importer India is concerned that the rallying oil prices are hurting its economy, and its Petroleum Minister Dharmendra Pradhan reiterated the need for “stable and moderate” prices in a phone conversation with Saudi Arabia’s Energy Minister Khalid al-Falih.
India—which imports around 80 percent of the oil it consumes—has been particularly hurt by the higher oil prices. As Brent Crude prices briefly broke above $80 a barrel on Thursday, gasoline and diesel prices in India surged to a five-year-high, also due to a weakening rupee against the U.S. dollar.
“Minister Pradhan emphasised his desire for stable and moderate prices,” India’s Ministry of Petroleum & Natural Gas said in a statement on Friday, referring to the phone conversation between the Indian and Saudi ministers.
Saudi Arabia is currently India’s second-largest oil supplier after Iraq and ahead of Iran.
In early April, Pradhan said that oil prices at the then-level of $70 a barrel were ‘too high’ for India’s economy, which is a very price-sensitive market.
“I’d be more than happy if the prices are around $50 plus,” the minister said, adding that oil at $80 a barrel would “pinch India in a big way.”
In the talk they had on the phone on Thursday, Saudi minister al-Falih “assured Minister Pradhan that supporting global economic growth is one of the Kingdom’s key goals. He reiterated his commitment towards stable supplies and that the Kingdom together with other producers will ensure availability of adequate supplies to offset any potential shortfalls and ensure that prices remain reasonable,” the official statement from India reads.
Meanwhile, Asia’s oil import bill could reach US$1 trillion, likely having a marked negative effect on some economies, with RBC Capital Markets analysts noting that Asian oil consumers are most vulnerable to oil price jumps.
The Asia Pacific accounts for more than a third of global oil consumption, which currently stands at around 100 million barrels daily. At the same time, it produces less than a tenth of global oil, which is the reason for its heightened vulnerability to oil price swings.
By Tsvetana Paraskova for Oilprice.com
